Category Archives: Regulatory

Compliance, Regulatory, Standard of Care

The SEC proposed new rules last week to enhance Form PF reporting

February 11, 2022 Richard Chen Leave a comment

As background, Form PF requires private fund advisers with at least $150 million in private fund assets under management to report certain information to the SEC at least annually and for a subset of large private fund advisers to provide more information on a more frequent basis.

The rule proposal makes changes in three principal areas including:

Requiring current reporting by large private fund advisers for certain triggering events.

Change reporting thresholds and require additional information to be reported by large private equity advisers.

Require additional reporting by Large Liquidity Fund Advisers.

SEC Proposes New Cyber Rules For Advisers

February 11, 2022 Richard Chen Leave a comment

On February 9, 2022, the SEC proposed new rules that require investment advisers registered with or required to register with the SEC to adopt policies and procedures reasonably designed to address the cybersecurity risks they face as well as to conduct periodic assessments and annual reviews of their cybersecurity programs. The proposed rules would also require advisers to make and update public disclosures on Form ADV regarding cybersecurity risks and significant cybersecurity incidents and to make additional confidential disclosures to the SEC regarding cybersecurity incidents experienced by the firm or any funds they manage within 48 hours of a cybersecurity incident.

The rule proposal, if adopted, will invariably require advisers to devote significantly more time and resources to cybersecurity risk management.

Hedge Clauses — Advisers Beware

February 11, 2022 Richard Chen Leave a comment

So cautions Richard Chen:

The SEC is taking aim at investment advisory contracts between the adviser and its clients, and many advisers may need to amend those contracts in light of the staff’s recent guidance where it takes the position that certain contract provisions designed to protect the adviser from liability constitute so-called “hedge clauses” that raise confusion as to whether the client is waiving its right to take action against an adviser provided under federal or state laws. The types of provisions can vary, but the SEC is particularly focused on claims where an adviser disclaims liability for its acts or omissions other than those that result from its gross negligence, willful misconduct, or bad faith.

Huckleberry FINRA and Life on the MissiSECippi: Mark Twain, FINRA, SEC, CFTC and NASAA Enforcement Actions (November and December 2021)

February 9, 2022 Clifford E. Kirsch, Editor Leave a comment

From Brian Rubin and Amanda C. Oliveira in this month’s column for NSCP Currents:

Samuel Langhorne Clemens, d/b/a Mark Twain, was the author of many outstanding (and often humorous) books and short stories that had good guys (e.g., Huck, Jim and Tom), bad guys (e.g., Pap Finn; the Duke and the Dauphin, who were the equivalent of the 19th century boiler room fraudsters), self-regulators (e.g., Aunt Polly and the Widow Douglas), an actual Judge (well, fictional, but you know what we mean) (Judge Thatcher, father of Becky), and sanctions (the Duke and the Dauphin are tarred and feathered – a bit different from being censured or ordered to cease and desist). In other words, his stories sound a lot like some of the securities enforcement cases we regularly read.